Economy

ZTE slapped with export restrictions by US Commerce Department

ZTE slapped with export restrictions by US Commerce Department

In addition to these monetary penalties, ZTE also agreed a seven-year suspended denial of export privileges, which could be activated if any aspect of the agreement was not met and/or if the company committed additional violations of the Export Administration Regulations (EAR).

The Department of Commerce announced today that all American companies are now banned from selling components to ZTE, due to the company violating the terms of the sanctions case. Oclaro Inc, which got 18 percent of its fiscal 2017 revenue from ZTE sales, fell 14 percent.

The Department of Commerce has now determined ZTE made false statements to BIS in 2016, during settlement negotiations, and 2017, during the probationary period, related to senior employee disciplinary actions the company said it was taking or had already taken.

ZTE didn't respond to calls seeking comment that were made after business hours in China.

Meanwhile, Britain's main cyber security agency said on Monday it has written to organizations in the UK's telecommunications sector warning about using services or equipment from ZTE.

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A lawyer representing suppliers to ZTE said that this ban is "highly unusual" and that it will be "devastating to the company".

"This will be devastating to the company, given their reliance on US products and software", said Jacobson. It has relied on US companies including Qualcomm Inc QCOM.O , Microsoft Corp MSFT.O and Intel Corp INTC.O for components. You can find the Department of Commerce's announcement here.

This is a regulatory action and is unrelated to any ongoing trade-related actions. After the USA placed export restrictions on ZTE in 2016 for Iran sanctions violations, the China's Ministry of Commerce and Foreign Ministry criticized the decision.

The five-year U.S. government investigation into ZTE's actions was first revealed in March 2016. It also makes it illegal for United States companies to sell components to ZTE. Although Commerce Department officials would not discuss the report, they said the department followed up in February.

USA authorities issued an order today barring United States exports of sensitive technology to Chinese telecom giant ZTE because of false statements made during an investigation into its illegal sale of goods to Iran and North Korea.


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